acxell Advisor | Banking Newsletter

Welcome to acxell Advisor

Banking Newsletter

DOWNLOAD WINTER 2025

Inside Spring 2025 Issue

Tracking the required information for Loan Modifcations

Loan ModificationTracking

Accounting for Loan Modifications
Are you tracking the right information?

n 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-02, which eliminated the accounting and reporting requirements for troubled debt restructurings for banks that have adopted the current expected credit losses allowance methodology. This article points out that now is a good time for banks to review their policies, procedures and controls to be sure they’re tracking the information needed to fulfill their disclosure obligations.

Read the full article

Benchmarking to identify and calculate key performance indicators-KPIs

Identifying and calculating needed KPIs

Benchmarking: Using KPIs to drive success

Benchmarking can help a bank identify and calculate key performance indicators (KPIs) it can use to compare its performance with established standards. Those standards may be industry averages, the performance of “best-in-class” banks, or even the bank’s past performance. This article notes that benchmarking can be an effective tool for identifying areas for improvement, spotting dangerous trends while there’s still time to address them and enhancing a bank’s profitability.

Read the full article

How to monitor and mange interest rate risk

Monitoring Interest Rate Risk

How to monitor and manage interest rate risk

Interest rate fluctuations can significantly affect a bank’s deposit stability, earnings and asset values, for better or worse. Banks need to control their interest rate risk to ensure their capital and liquidity remain stable through the ups and downs. This article defines several kinds of interest rate risk, including repricing risk, yield curve risk and options risk. It also suggests several steps banks can take to monitor and mitigate interest rate risk.

Read the full article

Brief Summary of recent trends in banking industry

Spring 2025

This brief summary of recent developments in banking explains the rule to remove medical bills from credit reports, reviews the need for vigilance against FinCEN-related fraud schemes, and looks at some strategies for preventing elder fraud.

Read the full article

DOWNLOAD WINTER 2025

Inside Winter 2025 Issue

Outsourcing Internal Audit

Should your bank outsource its internal audit program?

A strong internal audit program is a critical tool to help banks ensure regulatory compliance, manage risk, maintain operational efficiency, and inspire confidence in their financial and reporting practices. An internal audit program also can help prevent and detect fraud. This article notes that, according to the Association of Certified Fraud Examiners’ most recent report on occupational fraud, internal audits are associated with significant reductions in the magnitude and duration of frauds.

Read the full article

Risks of an imbalanced asset concentration

Maintaining the right asset concentration mix

Assessing asset concentration
Maintaining the right balance

One advantage of community banks is the business relationships they’re typically able to develop within their local communities. This includes providing loans to local industries and businesses that may have a strong impact on the bank’s profitability. This article points out that while asset concentration in local industries can be a strength, it’s important to manage those assets carefully to avoid the downsides, including the risk of heavy concentration in an industry that’s losing ground.

Read the full article

BOLI - a highly tax-efficient long-term investment option

BOLI an employee benefit tool?

BOLI: A powerful employee benefit tool

Community banks continue to deal with a shortage of skilled labor and rising employee benefit costs. So, many are turning to bank-owned life insurance (BOLI). BOLI is a highly tax-efficient long-term investment option. This article explains that it also can be a powerful tool for funding benefits for executives and other key employees, enhancing a bank’s appeal to prospective workers.

Read the full article

Brief Summary of recent trends in banking industry

Winter 2025

In this brief summary of the latest developments in community banking, we discuss the increasing importance of cybersecurity testing for banks; explain that the FFIEC is directing banks to use updated government and industry resources to help better manage their cybersecurity risks; and note that the CFPB is targeting banks’ improper overdraft opt-in practices.

Read the full article

DOWNLOAD FALL 2024

Inside Fall 2024 Issue

Ensure that your anti-money laundering program is up to date

AML/CFT Requirements

Review, revise, repeat
Is it time to revisit your anti-money laundering program?

Community banks should review their anti-money laundering programs to keep them current. This article points out that to ensure their programs will pass muster with examiners, banks need to review the Anti-Money Laundering (AML) Act of 2020 and make any necessary changes to comply with the AML/CFT national priorities outlined in 2021 by the Financial Crimes Enforcement Network (FinCEN). A sidebar discusses proposed rules that would beef up AML/CFT requirements.

Read the full article

Guidance on managing crypto-asset risks

How to manage liquidity risk from crypto-assets

Last year, there were several notable bank failures, some of which were connected to market vulnerabilities associated with cryptocurrency and crypto-asset-related entities. In the wake of these failures, the federal banking agencies provided banks with guidance on managing crypto-asset risks. This article discusses several highlights of the general guidance, and notes that because crypto-assets are now a fact of life, community banks must take care to manage them properly.

Read the full article

Responding to shifting customer needs

Best practices for building customer loyalty

In today’s rapidly shifting marketplace, community banks must ensure they’re proactive in anticipating — and responding to — customer needs. This will help retain customers and maintain bank profitability over time. This article offers some best practices to help banks compete and thrive, including identifying core deposits and developing an understanding of customer behaviors.

Read the full article

Brief Summary of recent trends in banking industry

Fall 2024

In this brief summary of the latest developments in the banking industry, we look at the results of a 2023 survey of bank loan approval policies. We also note the fact that the Securities and Exchange Commission’s controversial climate disclosure rule has been placed on hold as a result of harsh criticism and multiple legal challenges, and highlight a guide that was recently published by the federal banking agencies providing community banks with valuable tips for managing third-party relationships.

Read the full article

DOWNLOAD SPRING 2024

Inside Spring 2024 Issue

Financial Institutions liable for ACH losses

Court Decision re ACH Losses

Federal court: Financial institution liable for ACH fraud losses

How do courts view financial institutions’ responsibility to monitor ACH transactions for potential fraud? This article discusses a recent case in which the U.S. District Court for the Eastern District of Virginia held a credit union liable for more than $500,000 in fraudulent ACH payments deposited into a member’s account and quickly withdrawn. The article notes that while there was little or no evidence that the credit union had actual knowledge of the scam, the court found that such knowledge was imputed to the credit union based on several factors. A sidebar explains what other courts have said on the issue: Studco Building Systems US, LLC v. 1st Advantage Federal Credit Union, No. 2:20-CV-417, 2023 WL 1926747 (E.D. Va. Jan. 12, 2023). Shapiro v. Wells Fargo Bank, No. 18-15014, 2019 U.S. App. LEXIS 35604 (11th Cir. Nov. 27, 2019).

Read the full article

FAQs re selling mortgages on the secondary market

Know your risks
FAQs about selling mortgages on the secondary market

In an increasingly volatile marketplace, community banks need to be resourceful to take advantage of strategies that can help them maintain profitability and stability over time. This article discusses the practice of selling mortgage loans that a bank originated to secondary market investors. The article notes that while this can create a much-needed influx of cash, it’s important for the bank to understand and mitigate the risks.

Read the full article

Final new rules to modernize CRA

Staying atop the new-and-improved CRA rules

Final rules to strengthen and modernize the Community Reinvestment Act were unveiled by the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation late last year. This article explains that, among other things, the new rules strive to adapt the CRA regulations to changes in the banking industry, including the expanded role of mobile and online banking. The article points out that all banks should reevaluate their CRA programs in light of the new rules, and prepare for any necessary adjustments.

Read the full article

Brief summary of recent trends in banking

Spring 2024

In this brief summary of recent developments in the banking industry, we look at recent guidance on how to manage risks associated with buy now, pay later loans as well as recent guidance on managing the risks of venture loans. We also explain a recent proposed rule issued by the Consumer Financial Protection Bureau intended to rein in excessive overdraft fees charged by large banks.

Read the full article

DOWNLOAD WINTER 2024

Inside Winter 2024 Issue

Postmortems of Failed Institutions

Learn From Past Mistakes

“Postmortems” on failed institutions are instructive for community banks
In the aftermath of three notable bank failures in 2023, federal banking regulators issued comprehensive reports detailing the underlying causes of those failures. The reports point out management shortcomings that led to the bank failures — as well as regulators’ plans to become more proactive in addressing bank risks. This article showcases some highlights of the three reports. It also suggests that banks should expect greater regulatory scrutiny in the future, particularly with respect to capital, liquidity risk and interest rate risk. A sidebar addresses the role of social media in liquidity risk.

Read the full article

Using Data Visualization Software for BSA/AML Monitoring

What can visual analytics do for your bank?

Criminals are continuously looking for ways to use rapidly advancing technology for their own nefarious purposes. This is an ongoing issue for many community banks as they try to prevent money laundering and other crimes from happening within their operations. This article explains that banks need to protect themselves from criminal infiltration and ensure they remain in compliance with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) laws and regulations. It suggests that using data visualization software to help detect possible crimes before they can take hold can be helpful in that effort.

Read the full article

7 Ways of AI Banking Transformation

7 Ways AI is Transforming the Banking Industry

Artificial intelligence (AI) is impacting businesses in virtually every industry today, and banking is no exception. This article notes that banks of all sizes increasingly recognize AI’s potential to help them improve efficiency, reduce costs, enhance the customer experience and combat fraud. It offers seven examples of how banks are using AI, including in customer service, fraud prevention and underwriting decisions.

Read the full article

Brief summary of recent trends in banking

Winter 2024

This brief summary of recent developments in banking lists eight critical elements of sound liquidity risk management from the 2010 “Interagency Policy Statement on Funding and Liquidity Risk Management (SR 10-06).” It also notes that some federal regulatory agencies are cracking down on “junk fees” charged by some banks and businesses. Finally, it raises an alarm about a recent virtual currency investment scam known as “pig butchering.”

Read the full article

DOWNLOAD FALL 2023

Inside Fall 2023 Issue

Banks Are Most Affected by Fraud

Fraud in Banks - Are You Keeping Occupational Fraud Under Control?

According to the Association of Certified Fraud Examiners (ACFE), the banking and financial services industry consistently tops the list of industries most frequently affected by occupational fraud. Among other things, this article discusses several categories of occupational fraud as well as some common fraud schemes and detection methods. A brief sidebar summarizes the antifraud controls that were most effective in terms of reducing fraud losses and duration.

....Read the full article

Managing Commercial Real Estate Risk

How to Manage Commercial Real Estate Risk in the Post-Pandemic Era

Community banks, by their very nature, tend to have higher concentrations of commercial real estate (CRE) loans than larger institutions. This article explains that any concentration in certain types of loans, borrowers or collateral exposes banks to heightened risks, so banks need to be proactive in managing CRE concentration risk. It also points out that a confluence of recent trends has elevated CRE risks for many banks.

......Read the full article

Brief summary of recent trends in banking

Fall 2023

This brief summary of recent developments in banking discusses the risks and rewards for banks of doing business with marijuana-related businesses, explains new interagency guidance on managing third-party risk and warns banks to avoid engaging in “digital redlining.”

....Read the full article

Proactive Due Diligence on Loans Pays Off

Building Your Core Deposits

Building Your Core Deposits for the Long Term

Community banks need to stay at the top of their game to maintain both stability and profitability. This article points out that banks have many technological, regulatory and digital factors to consider in the effort to stay competitive. It notes that a key factor in that effort is to focus on growing core deposits and suggests several steps banks can take to attract and sustain deposits. These include recognizing the importance of branches and developing targeted services.

....Read the full article

DOWNLOAD SUMMER 2023

Inside Summer 2023 Issue

Recent Bank Failures Raise Regulatory Scrutiny

In the Wake of Bank Failures - Expect Increased Scrutiny from Regulators

The failures of Silicon Valley Bank and Signature Bank and the self-liquidation of Silvergate Bank in March 2023 served as wake-up calls for banking regulators and lawmakers. Although industry experts agree that steps must be taken to avoid similar failures in the future, they disagree over whether the solution is to implement stricter banking regulations or simply to improve oversight under existing regulations. This article suggests that, whatever the answer, banks can expect regulators to watch them more closely, particularly regarding capital, liquidity and interest rate risks.

....Read the full article

Avoid Jeopardizing Your SBA Guarantees

Don't Take Government Guarantees for Granted
How to avoid jeopardizing your SBA guarantees

Banks that participate in U.S. Small Business Administration (SBA) lending programs must comply with all SBA requirements and standards to ensure that the government will honor its loan guarantees. This article explains that these loans allow banks that follow prudent lending practices to expand customer base, reduce risk, boost lending capacity (the guaranteed portion of these loans doesn’t count toward a bank’s legal lending limit), and improve liquidity (the guaranteed portion can be sold on the secondary market).

......Read the full article

Brief summary of recent trends in banking

Summer 2023

In this brief summary of recent developments in banking, we look at two “junk fee” practices that the Consumer Financial Protection Bureau has deemed likely to be unlawful and discuss whether banks should amend their employee retirement plans in light of recent SECURE 2.0 Act of 2022 provisions.

....Read the full article

Proactive Due Diligence on Loans Pays Off

How Can Financial Due Diligence Support Your Loans?

Many currently problematic loans once looked good on paper — but now, aren’t worth the paper they’re printed on! This article points out that to ensure a bank doesn’t succumb to the lure of loans that seem to be — and are — too good to be true, it’s important to have a policy of conducting proactive due diligence practices from the start. It provides several steps to take and lists some common ratios that are useful in assessing risk. The article notes that due diligence is key in helping loan portfolios remain stable and profitable over time.

....Read the full article

DOWNLOAD WINTER 2023

Inside Winter 2023 Issue

8 tips for successful transition planning

Managing Transition Risk

Managing Transition Risk
8 tips for successful succession plan

One of the biggest challenges community banks face today is a shortage of banking talent. So, it’s critical for banks to develop a solid succession plan to manage transition risk. When key management personnel retire or leave unexpectedly, a succession plan helps ensure that the bank is prepared for the change and proactively addresses the vacancy.

....Read the full article

Managing Liquidity Risk

Stay on Top of Liquidity Risk

In an uncertain economy, with rampant inflation and other significant economic headwinds, it’s a good idea for community
banks to ensure their loans are based on sound funding sources and that the degree of liquidity risk they’re carrying is reasonable and manageable for the foreseeable future. This means your bank needs to have adequate procedures in place to mitigate risk and stay solvent through tough times.

....Read the full article

Is Blockchain the future of banking?

Is Blockchain the Future of Banking?

Blockchain, the technology behind Bitcoin and other cryptocurrencies, has been in the news a great deal in recent months. Headlines about the volatility of cryptocurrencies and their relative lack of regulatory oversight have generated wide- spread skepticism about the technology. But the uses of blockchain go well beyond cryptocurrency. And its potential benefits for banks have led many to believe that blockchain is poised to transform the industry.

......Read the full article

Interest Rate Risk

Monitoring and Managing Interest Rate Risk

For community banks, interest rate risk is a part of doing business, so it’s critical for banks to monitor that risk and take steps to control it. The “right” level of risk depends on several factors, including the size and complexity of a bank’s operations, as well as the sufficiency of its capital and liquidity to withstand the potential adverse impact of interest rate fluctuations.

......Read the full article

Brief summary of recent trends in banking

Winter 2023

In this issue we highlight the main points of the new NACHA rules that are effective September 16, 2022 for "Micro-Entries"and the fraud detection requirements that are effective march 17, 2023.We also discuss the federal banking agencies' new proposal to modernize their CRA regulations and the warning from the CFPB to lenders that use "black box" for credit decision making.
....Read the full article

DOWNLOAD FALL 2022

Inside Fall 2022 Issue

Managing Third-Party Risk

Are You Managing Third-Party Risk?

Banks increasingly are turning to outside vendors and partners to enhance their products and services, gain access to innovative technologies, benefit from expert advice, increase efficiency and reduce costs. This article notes that it’s important to have processes in place for managing the risks associated with these third-party relationships, and explains that federal banking regulators have high expectations for banks when it comes to third-party risk management. A sidebar summarizes recent Fintech due diligence guidance for community banks.
....Read the full article

Adding new business lines to increase earnings

How to Expand Options and Improve Your Bank's Bottom Line

Community banks continue to deal with economic uncertainty as a result of the COVID-19 pandemic and its impact on businesses and organizations. They’re also faced with an increasingly rapid pace of technological change affecting many aspects of banking. This article suggests that banks may want to consider adding some new business lines that can increase their fee income and help stabilize profits.
....Read the full article

Are you ready for a new cyberincident reporting rule?

Ready for the New Cyberincident Reporting Rule?

Banks are now required to report significant cyberincidents within 36 hours, under a new rule issued by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC). This article explains details of the rule and answers some frequently asked questions about it.
......Read the full article

Brief summary of recent trends in banking

Fall 2022

In this summary of recent developments in community banking, we highlight the main points of the Office of the Comptroller of the Currency’s latest installment of its Semiannual Risk Perspective, explain that the IRS has finalized its guidance on the tax consequences of the LIBOR transition and discuss the most recent ransomware advisory from the Financial Crimes Enforcement Network.
....Read the full article

DOWNLOAD SUMMER 2022

Inside Summer 2022 Issue

CECL adoption a bank priority

How to Expand Options and Improve Your Bank's Bottom Line

By now, all banks are familiar with the CECL model for estimating credit losses, and most have taken concrete steps toward adopting it. This article notes that banks that are behind schedule in their transition efforts need to kick those efforts into high gear. It explains that it’s also important for banks to evaluate — and, if necessary, update — their policies, procedures, systems and internal controls to ensure credit losses will be properly calculated and documented. A sidebar points out that the FASB has indicated that no further deferrals are expected.
....Read the full article

Stress testing - bank's potential risks

Under Stress - conduct stress testing to stay competitive

Stress testing enables banks to simulate specific “disaster” scenarios and evaluate the bank’s (or loan’s) potential for withstanding them in terms of earnings, capital adequacy and other financial metrics. This article explains that such testing can provide valuable information about potential risks that community banks can use to stay afloat through inevitable economic ups and downs.
......Read the full article

Is cryptocurrency in your bank's future plans?

Is cryptocurrency the future of banking?

The popularity of bitcoin, ether and other cryptocurrencies has exploded in recent years. But an absence of federal oversight “leaves consumers open to scams and dangerous price volatility,” many lawmakers warn. This article explains that this lack of oversight may change in the near future and discusses a recent executive order that signals support of the potential benefits of creating a U.S. Central Bank Digital Currency.
......Read the full article

Brief summary of recent trends in banking

Summer 2022

In this brief summary of recent developments in banking, we look at a recent Consumer Financial Protection Bureau announcement that it will expand its antidiscrimination efforts to situations in which fair lending laws may not apply, including include servicing, collections and consumer reporting. In addition, we explain the Financial Crimes Enforcement Network’s Rapid Response Program for cyber-enabled financial crime and highlight a recent FDIC notice requirement for banks involved in crypto activities.
....Read the full article

DOWNLOAD WINTER 2022

Inside Winter 2022 Issue

FINCEN's new AML/CFT priorities

FinCEN’s National AML/CFT priorities set the tone

In June 2021, the Financial Crimes Enforcement Network (FinCEN) issued its first set of government-wide priorities (the Priorities) for anti-money laundering and countering the financing of terrorism (AML/CFT). As required by the Anti-Money Laundering Act of 2020 (AML Act), the Priorities identify and describe the most significant AML/CFT threats currently facing the United States.
....Read the full article

Should your bank use third party vendors?

Re-imagining branch banking for the digital age

Keeping branch banking profitable in the digital age

The COVID-19 pandemic has led to an increase in online banking. However, the transition to
virtual banking was already well underway.As community banks look to the future, they need to
re-imagine branch banking for the digital age. This means strengthening what’s working and getting rid of what isn’t. Direct banking at branches can still be vital to community banks’ financial health as long as they measure branch performance and correct as necessary.
....Read the full article

Managing risk for online account opening

Your bank's cyberattack ransomware plan

What's your Bank's plan to counter ransomware attacks?

Cybersecurity continues to be a key risk that businesses face today, and banking is among the industries most affected by cyberattacks.Some experts estimate that around a quarter of all
malware attacks target financial institutions. Of particular concern are ransomware attacks, which have increased dramatically in the past couple of years.
......Read the full article

Brief summary of recent trends in banking

Winter 2022

In this summary of recent developments in banking, we discuss the new deadline for compliance with the CFPB’s revised general qualified mortgage rule and how banks should prepare, look at the new lease accounting rules, and take note of a new guide for banks published by the federal banking agencies on conducting due diligence on FinTech companies.
....Read the full article